This doesn’t seem that surprising, most of these companies are “failures” - seems to stand to reason that many of these founders would cast some blame on the VCs (perhaps for not continuing to support the business when it was clear that it was not working).
Also not surprising is the that VCs overestimate their value.
Lastly founders probably have a much more diverse (and perhaps incorrect view - probably fostered by the VCs) of actual value add of VCs.
Repeating as public service announcement of what folks in the know tell each other:
Vinod has a very negative reputation in the Valley. He used to be known as the biggest anti-founder VC when he was at Kleiner. He'd come in, use sharp elbows to push founders around and out, then companies would crumble. He's learned but not enough.
His new marketing of himself has helped (as has Rabois), but you can't change who he is. When given a chance, he'll take advantage of early stage startups. That's why you don't see many companies he's made. And he's been at it a long time - 27 years! He gets in the way because it's all about him and his huge, insatiable ego. He's much more old school VC in that way - but in the Tom Perkins vein, not Don Valentine. It's his way because it's his money.
The only way to keep Vinod honest is to get other investors. If he's your lead, the knife isn't far from your back.
I don't know, I don't agree with the article but I don't think it is a stretch to say something like "95% of startups fail, everyone knows this;" I don't know what the actual percentage is but I think this comports generally with reality and what most people understand.
Also, many people, even startup founders see VCs as somewhat predatory, even founders that are very fondly though in the HN community.
This is the time I need to pop up every so often. Vinod has a very negative reputation in the Valley. He used to be known as the biggest anti-founder VC when he was at Kleiner. He'd come in, use sharp elbows to push founders around and out, then companies would crumble. He's learned but not enough.
His new marketing of himself has helped (as has Rabois), but you can't change who he is. When given a chance, he'll take advantage of early stage startups. That's why you don't see many companies he's made. And he's been at it a long time - 27 years! He gets in the way because it's all about him and his huge, insatiable ego. He's much more old school VC in that way - but in the Tom Perkins vein, not Don Valentine. It's his way because it's his money.
The only way to keep Vinod honest is to get other investors. If he's your lead, the knife isn't far from your back.
I suspect this happens a lot. For VCs it’s very much in their interest to hype up the startup life and indirectly ruin financially as many people as possible.
It's worse than that. He's not even talking about all startups, he's talking about SV-style VC-backed startups. That's a small subset of all startups even if you only count tech.
The value of VCs was never that they can identify successful startups correctly. It was always just the fact that they had money they didn't have any use for and were willing to blow it off.
Until GPT4 is 3x better at accumulating useless capital the position of VCs in the whole scheme is safe
The broader thing I've realized of late is that so many startups exist simply because they are building something that appeals to VCs, not something that necessarily appeals to any sort of customer.
So we have reason to be skeptical of any claim to wisdom from VCs and even any claim to understand relevant metrics or KPIs. Good VCs are humble about this, but others posture behind it.
What we should really be wondering is how many bad decisions are made by startups based on pressure from VCs.
Since average (non-accredited) investors are prohibited by law from investing in early stage startups, those who are not prohibited get a highly leveraged game which some are bound to play successfully several turns in a row.
There is nothing wrong with this, but it's sad to see promising startups make bad decisions because they are simply striving for rapid growth at all cost.
"...so far at least the great majority of VC investments in YC-funded startups have been by the better firms. I'm not sure exactly why, since bad VCs are more numerous than good ones; perhaps the bad VCs assume the companies at an event as public as Demo Day will already have been picked over by the time they get a shot at them."
Or perhaps the lower tier VCs just can't compete with the "better" firms.
I find it interesting that you so readily equate "lower-tier" VCs with "lower quality" VCs. Is this a reliable rule?
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